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Returns from European property markets jumped from 3.7% in 2003 to 10% last year, according to a new index launched yesterday. For US investors in European property, the figure could be double due to the effect of the weak dollar.

Over three and four years, the index showed that annualised European property returns beat European equities, returning 6.3% and 6.8% against -3% and 6.2% respectively.

The particularly-strong returns for US investors explains the flood of US money invested in Europe in the past three years, according to Investment Property Databank.

The pan-European index aims to provide investors with an objective basis for looking at how European property markets perform as a whole.

Investment Property Databank said the index was not a benchmark by which investors could measure pan-European property funds. Rather, it said it hoped to sell the index as a tool to gauge which countries and property sectors were best.

The index is based on a €439bn ($541bn) sample of European properties held in professionally managed investment portfolios.